Principles of Marketing 1 To 3

PRINCIPLES OF MARKETING NEP SYLLABUS BCOM 1ST SEM
MODULE 1: INTRODUCTION TO MARKETING
INTRODUCTION
The first concept to be understood in marketing management is MARKET.
The term 'Market' is derived from the Latin word 'maratus'. This means merchandise, wares,
traffic, trade or place of business. But its central theme is that it is an activity which center’s
round two important operations viz. BUYING and SELLING. Simply, it means an 'Exchange
Activity'.
DEFINITION OF MARKET
"A market is an aggregate demand of the potential buyers for a product/service."- American
Marketing Association
"A market is an area for potential exchanges."- PHILIP KOTLER
DEFINITION OF MARKETING
"Marketing is concerned with the people and activities involved in the flow of goods and
services from producer to consumer." - American Marketing Association
MEANING OF MARKETING
Marketing is an ongoing process of planning and executing the marketing mix (Product, Price,
Place, and Promotion) for products, services or ideas to create exchange between individuals and
organizations.
FEATURES OF MARKET
 Buyers and Sellers are the two sides of the market.

 Meeting place for exchange of goods and services.
 Meeting of minds is more important than meeting place.
 Purchase consideration (Price) should be agreed.
 Existence of free competition to sell the product or service.
 Exchange involves physical and legal transfer of ownership of goods to the buyer.
DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 1

NATURE AND IMPORTANCE OF MARKETING
1. Marketing is consumer – oriented process

2. Market starts and ends with customer(C2C)
3. It is a guiding element of business
4. It is a system (Dynamic/Ongoing process)
5. It is a goal-oriented process
6. It is a process of exchange
7. It helps the community to satisfy their social and economic needs
8. It helps the enterprise to adapt to the changing conditions and circumstances.
9. It helps the enterprise in achieving the maximum efficiency, productivity and profitability
with the minimum of effort and cost.
10. It ensures the economic growth of the enterprises which results in growth and economic
development of the country.
SCOPE OF MARKETING
1. Study of consumer needs & wants

2. Study of consumer behaviour
3. Product planning and decision
4. Pricing decision
5. Distribution
6. Promotion
7. Market research
8. Feedback from customers
9. Environmental analysis
10. Social responsibility

FUNCTIONS OF MARKETING
1. Identify needs of the consumer: The first steps in marketing function is to identify the needs
and wants of the consumer that are present in the market. Companies or businesses must
therefore gather information on the customer and perform analysis on the collected information.
2. Planning: The next step in marketing function is planning. It is considered very important for
a business to have a plan. The management should be very clear about the company objectives
and what it wishes to achieve from the created plan.
3. Product Development: After the details are received from the consumer research, the product
is developed for use by the consumers. There are many factors that are essential for a product to
be accepted by the customer, a few factors among the many are product design, durability and
cost.
4. Standardisation and Grading: Standardisation refers to the process of ensuring uniformity in

the product which means that a product developed by a business shall be standard for every
consumer with the same quality and design and this is one of the key aspects that needs to be
maintained by the business.
Grading is referred to as the process of classifying products that are similar in quality and
characteristics. Grading helps in making the customer know about the quality of the product
offered. It helps in making customers understand that the products conform to highest quality
standards.
5. Packing and Labelling: The first impressions of a product are its packaging and the label
attached to it. Therefore, packaging and labelling should be looked after very well. It is a well
known fact that a great packaging and labelling goes a long way in ensuring product success.
6. Branding: Branding is referred to as the process of identifying the name of the producer with
the product. Certain brands are there in the market which have a lot of goodwill and any product
coming from the same brand will be accepted more warmly by the consumers. Although, having
a separate identity for the product can be helpful.
7. Customer Service: A company has to set-up various kinds of customer service based on their
product. It can be pre-sales, technical support, customer support, maintenance services, etc.

8. Pricing: It can be regarded as one of the most important parts of marketing function. It is the
price of a product that determines whether it will be successful or a failure. Some other factors
are market demand, competition, price of competitors.
9. Promotion: Promotion is the process of making the customers aware of the product by
presenting it to customers across various channels of promotion and entice them to buy the
product. The major channels of promotion are: advertising, media, personal selling and
promotion (publicity).
10. Distribution: Distribution refers to the movement of consumer goods to the point of
consumption. A company must ensure that the correct channel of distribution is selected for the
product.
11. Transportation: Transportation is defined as the physical movement of goods from one
place to another. In other words, it is the movement of goods from the place of production to the
place of consumption.
Also, the correct mode of transportation can be selected based on the geographical boundaries of
the market.
12. Warehousing: Warehousing of products creates time utility. It is often seen that there is a
gap between the time a product is produced and the time when it is consumed. Companies like to
maintain the smooth flow of goods even when the products are of seasonal nature. Warehousing
and storing provides the opportunity to provide goods during off season also.

MEANING OF MARKETING MIX
The marketing mix is defined by the use of a marketing tool that combines a number of
components in order to become harden and solidify a product’s brand and to help in selling the
product or service. Product based companies have to come up with strategies to sell their
products, and coming up with a marketing mix is one of them.
(OR)
Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the
market and sell it. It is about positioning a product and deciding it to sell in the right place, at the
right price and right time.
ELEMENTS OF MARKETING MIX
1.
Product
7.
Physical 2. Price
evidence
4p's&
6. 7P'S 3. Place
Process
5. People 4.
Promotion

1. Product in Marketing Mix:
A product is a commodity, produced or built to satisfy the need of an individual or a group. The
product can be intangible or tangible as it can be in the form of services or goods.
2. Price in Marketing Mix:
Price is a very important component of the marketing mix definition. The price of the product is
basically the amount that a customer pays for to enjoy it. It includes cost + profit.
3. Place in Marketing Mix:
Placement or distribution is a very important part of the marketing mix strategy. We should
position and distribute our product in a place that is easily accessible to potential
buyers/customers.
4. Promotion in Marketing Mix:
It is a marketing communication process that helps the company to publicize the product and its
features to the public. It is the most expensive and essential components of the marketing mix,
that helps to grab the attention of the customers and influence them to buy the product. The
promotion might include direct marketing, advertising, personal branding, sales promotion, etc.
5. People in Marketing Mix:
The company’s employees are important in marketing because they are the ones who deliver the
service to clients. It is important to hire and train the right people to deliver superior service to
the clients.
6. Process in Marketing Mix:
The business process should be well structured and verified regularly to avoid mistakes and
minimize costs. To maximize the profit, it’s important to tighten up the enhancement process.
7. Physical Evidence in Marketing Mix:
In the service industries, there should be physical evidence that the service was delivered. A
concept of this is branding. For example, when you think of “fast food”, you think of KFC.
When you think of sports, the names Nike and Adidas come to mind.

APPROACHES OF MARKETING
Marketing approaches means information designed to sell additional products and services.
Approaches to study of marketing can be discussed under two broad headings (a) Traditional
approach and (b) Modern approach.
Five basic approaches are commonly used to describe the marketing systems
Commodity approach
Functional approach
Institutional approach
Managerial or Decision-making approach
Systems-approach
Some Other approaches are as follows:
Legal approach
Societal approach Economic approach
Explanation:
1. Commodity approach: Under the commodity approach the focus is placed on the
product or it is an approach on the marketing on commodity wise basis. In other words,
the study relates to the flow of a certain commodity and its movement from the original
producer right up to the ultimate customer.
2. Functional approach: In this approach, marketing is regarded as “business of buying
and selling and as including those business activities involved in the flow of goods and
services between producers and customers.” This system gives too much importance to

various marketing functions -buying, selling, pricing, standardization, storage,

transportation, advertising, packing etc.
3. Institutional approach: In the institutional approach, the focus is on the study of
institutions- middlemen, wholesalers, retailers, importers, exporters, agencies,
warehousing etc., engaged in the marketing during the movement of goods. The approach
is also known as middlemen approach. This system pays attention to the problems and
functions of marketing institutions-transporting, banks and other financial institutions,
warehousing, advertising, insurance etc.
4. Managerial or Decision-making approach: This approach is the latest and scientific. It
combines certain features of the commodity, institutional and functional approaches. In
this approach, the focus of marketing study is on the decision-making process. The study
encompasses discussion of the different underlying concepts, decision influencing
factors, alternative strategies and techniques and methods of problem solving.
5. Systems-approach: The system approach can be defined as “a set of objects together
with the relationships among them and their attributes.” Systems focus on interrelations
and interconnections among the functions of marketing. The system examines marketing
connections (linkage) inside as well as outside the firm. Inside the firm there is a co-
ordination of business activities-engineering, production, marketing, price etc.
6. Legal approach: This approach emphasizes only one aspect i.e., transfer of ownership to
buyer: It explains the regulatory aspect of marketing. In India, the marketing activities are
largely controlled by Sales of Goods Act, Carrier Act etc. The study is concentrated only
on legal aspects, leaving other important aspects. This does not give an idea of marketing.
7. Societal approach: This approach has been originated recently. The marketing process is
regarded as a means by which society meets its own consumption needs. This system
gives no importance as to how the business meets the consumer’s needs. Therefore,
attention is paid to ecological factors (sociological, cultural, legal etc.) and marketing
decisions and their impact on the society’s well-being.
8. Economic approach: Economic approach considers market forces like demand, supply,
price etc. The market behaviour, the types of markets etc. are considered in this approach.

DEFINITION & MEANING OF MARKETING MANAGEMENT
According to Philip Kotler, "marketing management is the analysis, planning.

implementation and control of programme designed to create, build and maintain beneficial
exchanges and relationships with target market for the purpose of achieving organisational
objectives."
"Marketing management is the process of planning and executing the conception, pricing,
promotion and distribution of goods, services and ideas to create exchanges with target
groups that satisfy customer and organisational objectives."
CORE CONCEPTS THAT DRIVE MARKETS (MARKET – CYCLE)
Core Concepts of Marketing

GOALS OF MARKETING SYSTEM
A. GOALS BASED ON ECONOMIC ACTIVITY

 Creation of utility
 Creation of place utility
 Creation of time utility
 Possession utility
 Cost reduction
 Price stability
 Maximize consumption
 Maximize consumer satisfaction
 Maximize choice
 Maximize life quality
B. GOALS FOR LONG TERM RELATIONSHIP

Identify and extend into new target markets
Expand marketing channel and equip sales team to sell better
Conduct market research to help product development
Integrate marketing activities the activities of other departments
Adapting improved tools to measure ROI
Improve quality and consistency of marketing communication
Develop a website with comprehensive information and internet strategy
Enhance lead generation, nurturing, management and follow up
Gain additional industry knowledge and experience in all aspects of marketing

BENEFITS OF MARKETING
A. TO SOCIETY
 Delivery of standard of living
 Employment and income
 Equilibrium between supply and demand
 Creation of utilities
 Economic development
B. BENEFITS TO BUSINESS
 Revenue earning
 Information for decisions
 Management of innovation and change
 Long term success
 Free competition
THE ROLE OF MARKETING IN ECONOMIC DEVELOPMENT
 Specialization in activities of comparative advantage

 Enhanced resource-use efficiency and trade
 Advances in marketing with economic growth.
CONCEPTS OF MARKETING
TRADITIONAL CONCEPT MODERN CONCEPT
 Product oriented marketing  Customer oriented marketing

 Sales oriented marketing  Social oriented marketing

DIFFERENCE BETWEEN SELLING AND MARKETING
BASIS SELLING MARKETING
Definition The selling theory believes that if The marketing theory is a business plan,
companies and customers are dropped which affirms that the enterprise’s profit
detached, then the customers are not lies in growing more efficient than the
going to purchase enough commodities opponents, in manufacturing, producing
produced by the enterprise. The notion and imparting exceptional consumer
can be employed argumentatively, in value to the target marketplace.
the case of commodities that are not
solicited.
Related to Constraining customer’s perception of Leading commodities and services

commodities and services. towards the consumer’s perception.
Beginning point Factory Marketplace
Concentrates on Product Consumer needs
Perspective Inside out Outside in
Business Planning Short term Long term
Orientation Volume Profit
Cost Price Cost of Production Market ascertained

MARKETING ENVIRONMENT
MEANING
Marketing environment is the combination of internal and external factors which will have the
impact on the performance of a business unit. These factors influence and affect marketing
decisions.
DEFINITION
"A Company's marketing environment consists of the factors and forces outside of marketing
that affect marketing management ability to build and maintain successful relationships with
target customers". – PHILIP KOTLER
COMPONENTS OF MARKETING ENVIRONMENT
MICRO ENVIRONMENT
(CONTROLLABLE FACTOR) MACRO ENVIRONMENT
(UNCONTROLLABLE FACTOR)
1. Organization
2. Suppliers & supplies 1. Demography
2. Economic Environment
3. Marketing intermediaries
3. Social and cultural environment
4. Management philosophy 4. Political and legal forces
5. Customers 5. Science and technology
6. Competitors 6. Competition
7. Company resources 7. Ecology
8. International environment
8. Public
9. Customer demand

ENVIRONMENT SPECIFIC TO THE FIRM
1. GLOBAL ENVIRONMENT: The global business environment is a term used to
describe
that the challenges
what happens in one and opportunities
country or region that businesses
has an impact onface when
other operating
regions in a
or countries.
marketplace. It reflects the inter-connectedness of all parts of the world, which
The global environment
comprehensive platform toisgain
important for both of
more consumers nations and or
a product businesses
service. Itasensures
it offers
the
growthand
nations andfosters
development of nations
a good business and businesses.
relationship It improves
with other nations. the economic status
2. CONSUMER ENVIRONMENT: The consumer-environment comprises the family and
the cultural, sociological and economic factors.
3. TECHNOLOGY ENVIRONMENT: Technological environment refers to the changes
in the output, production methods, use of equipment and quality of the product.
and services
includes andrelated
force new methods and techniques
to scientific of and
innovations operating a business.
improvements in products as well
4. COMPETITIVE ENVIRONMENT:
production technology. Competitive
(OR) The technological Environment
environment is aforces
includes system where
relating
businesses
scientific
four compete with one
improvements
types of andanother. It has
innovations
competitive environment: ancompetition,
impact
purewhich on each
provide new business, its decisions
ways ofcompetition,
monopolistic producing
strategy they
oligopoly and take. There are two main types of competitors: direct and indirect. There
monopoly.

VALUE PHILOSOPHY IN MARKETING
VALUE OR CUSTOMER VALUE
Value in marketing, also known as customer-perceived value, is the difference between a

prospective customer's evaluation of the benefits and costs of one product when compared with
others. Value may also be expressed as a straightforward relationship between perceived benefits
and perceived costs.
Value = Benefits - Cost.
(OR)
Customer value is the benefit the customer derives from the product or services of the company.
The benefit derived should be more than the cost incurred by the customer.
CUSTOMER CREATION:
The main function of customer creation is to identify the right product and market segment and
to convert potential customers into paying customers.
VALUE CREATION:
Customer value creation means providing useful products and services to the customers worth
their time, money, and effort. Companies are maximizing their profits by developing value for
their customers.
There are four possible values that a company can create for its customers. They are (1)
Functional Value (2) Monetary Value (3) Social Value and (4) Psychological Value.
(1) Functional Value: Functional means the product offerings that could satisfy the needs of a
customer or solve a particular problem. Functional value includes the characteristic features of a
product.
(2) Monetary Value: Monetary value is the price the customer is willing to pay based on the
perceived worth of the product.

(3) Social Value: Social value refers to the extent to which the ownership of the product allows
the customer to connect to others. While buying a product customer evaluates whether the
product suits a particular social status, social class, or social group.
(4) Psychological Value: Psychological value refers to the extent to which the product allows a
customer to feel better.
VALUE DELIVERY PROCESS: The value delivery process includes choosing (or
identifying), providing (or delivering), and communicating superior value. The value chain is a
tool for identifying key activities that create value and costs in a specific business.
THREE PHASES OF THE VALUE DELIVERY PROCESS
The Faster The Better. The first way to increase value is simply to increase the speed you deliver the kind of value people are willing to pay for.
Offer Better Quality.
Add Value.
Increase Convenience.
Improve Customer Service. Selecting the value to be offered
Changing Lifestyles. is the first step in the value
Offer Planned Discounts.
delivering process. The firm finds
1. Choosing The out what constitutes value in the
Value
estimation of the customer and
accepts it as the value to be
offered.
2. Providing The
What the firm has promised Value/Delivering
to provide the customer has the value
to be actually provided. The
product offering must Communicating value means walking
actually carry the benefits the your audience from exposure, to
firm has promised and it 4.
Communicating awareness and attention, to
must be reached to the understanding, to evaluation and
The Value
customer in the most yielding, to retention, and finally to
satisfying manner. action.
3. Making a value proposition
5. Value Enhancement
The firm also continuously and proactively enhances the value. It collects feedback from the consumer about his
firm.
EPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page

UPSTREAM MARKETING:
Upstream marketing is a type of marketing strategy that focuses on a specific group of customers
and identifies their particular needs. It is a long-term approach to business that considers future
results.
UPSTREAM MARKETING STRATEGIES ARE:
 Analyze trend
 Focus on growth
 Create time line
 Think of innovative ideas
 Evaluate the market
 Surveying customers
VALUE INNOVATION:
Value innovation is a process in which a company introduces new technologies

or upgrades that are designed to achieve both product differentiation and low costs.
Value innovation is a key principle of "blue ocean strategy," a business approach that
focuses on creating new market spaces instead of fighting competitors existing market
share.
CO-CREATION OF VALUE
Co-creation of value is a business strategy, one that promotes and encourages active involvement
from the customer to create on-demand and made-to-order products. With co-creation,
consumers get exactly what they want and have a hand in making it happen. Like the NikeID
platform.

MODULE 2: CONSUMER BEHAVIOUR AND MARKET

SEGMENTATION
INTRODUCTION
Consumer behavior is the study of individuals, groups, or organizations and the processes they
use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs of
the consumer and society.
It is the attempt to understand and predict human actions in the buying role. Consumers' market
for many products and the growth of consumerism and consumer legislation since 1960 have
created special interest in Consumer behaviour and the formulation of marketing mixes to
respond favorably Consumer behaviour in the market place.
MEANING OF CONSUMER
Consumer is an individual who buys products or services for personal use and not for
manufacture or resale. A consumer is someone who can make the decision whether or not to
purchase an item at the store and someone who can be influenced by marketing and
advertisements.
DIFINITION OF CONSUMER
Section 2(7) of the Consumer Protection Act, 2019 defines a consumer as any person who buys
goods or services in exchange for consideration and utilizes such goods and services for personal
use and for the purpose of resale or commercial use.
DEFINITION OF CONSUMER BEHAVIOUR
Consumer behaviour is the study of how people buy, what they buy, when they buy
and why they buy. – PHILIP KOTLER
MEANING OF CONSUMER BEHAVIOUR
Consumer behaviour refers to the psychological, social and physical behaviour of potential
consumers as they become aware of, evaluate, purchase, consume and tell others about the
products or services.

PERSPECTIVES OF CONSUMER BEHAVIOUR
Managerial perspective
Consumer perspective
NATURE OF CONSUMER BEHAVIOUR
1. Influenced by various factor (such as marketing, personal, psychological, situational

factors etc.,)
2. Undergoes a constant change: Consumer behaviour is not static. It undergoes a change
over a period of time depending on the nature of products.
3. Varies from consumer to consumer.
4. Varies from region to region and country to county.
5. Varies from product to product.
NEED TO STUDY CONSUMER BEHAVIOUR
1. To satisfy need of customers.

2. Helps to understand consumer psychology.
3. Helps to understand consumer motives.
4. Helps to understand consumer choices.
5. Helps to understand consumer preferences.
6. For effective market segmentation and target marketing.

FACTORS INFLUENCING CONSUMER BEHAVIOUR

CULTURAL FACTOR SOCIAL FACTOR PERSONAL FACTOR PSYCHOLOGICAL FACTOR
1. Culture 1. Reference groups Family Roles and & life- cycle OccupationMotivation
1. Age Economic situation Life s
2. Sub culture Social class status Personality & Perception
3. self-concept Learning
2. 2.
3. 3. Beliefs
Attitudes
4.
5.
I. CULTURAL FACTOR
1. CULTURE: Culture refers to the cumulative deposit of knowledge, experience, beliefs,

values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations,
concepts of the universe, and material objects and possessions acquired by a group of
people in the course of generations through individual and group striving.
2. SUB CULTURE: Each culture contains smaller sub cultures a group of people with
shared value system based on common life experiences and situations: Sub culture
includes nationalities, religions, racial group and geographic regions. Many sub culture
make up important market segments and marketers often design products.
3. SOCIAL CLASS: Every society possesses form of social class which is important to the
marketers because the buying behavior of people in a given social class is similar. In this
way marketing activities could be tailored according to different social classes.

II. SOCIAL FACTORS
1. REFERENCE GROUPS: Reference groups have potential in forming a person attitude

or behavior. The impact of reference groups varies across products and brands. For
example if the product is visible such as dress, shoes, car etc. then the influence of
reference groups will be high. Reference groups also include opinion leader a person who
influences other because of his special skill, knowledge or other characteristics.
2. FAMILY: Family members can strongly influence buyer behaviour. The family is the
most important consumer buying organization society and it has been researched
extensively. Marketers are interested in the roles, and influence of the husband, wife and
children on the purchase of different products and services.
3. ROLES & STATUS: A person belongs to many groups, family, clubs, and
organizations. The person's position in each group can be defined in terms of both role
and status. For example: M plays the role of father, in his family he plays the role of
husband, in his company he plays the role of manager, etc. A Role consists of the
activities people are expected to perform according to the persons around them.
III. PERSONAL FACTORS:
1. AGE & LIFE-CYCLE: Age and life-cycle have potential impact on the consumer
buying behavior. It is obvious that the consumers change the purchase of goods and
services with the passage of time. Family life-cycle consists of different stages such
young singles, married couples, unmarried couples etc which help marketers to develop
appropriate products for each stage.
2. OCCUPATION: A person's occupation affects the goods and services. Blue collar
workers tend to buy more rugged work clothes, whereas white-collar workers buy more
business suits. A Company can even specialize in making products needed by a given
occupational group. Thus, computer software companies will design different products
for brand managers, accountants, engineers, lawyers, and doctors.

3. ECONOMIC SITUATION: Consumer economic situation has great influence on his

buying behavior. If the income and savings of a customer is high then he will purchase
more expensive products. On the other hand, a person with low income and savings will
purchase inexpensive products.
4. LIFE STYLE: Lifestyle of customers is another import factor affecting the consumer
buying behavior, Lifestyle refers to the way a person lives in a society and is expressed
by the things in his/her surroundings. It is determined by customer interests, opinions,
activities etc. and shapes his whole pattern of acting and interacting in the world.
5. PERSONALITY & SELF CONCEPT: Personality changes from person to person,

time to time and place to place. Therefore, it can greatly influence the buying behavior of
customers. Actually. Personality is not what one wears, rather it is the totality of behavior
of a man in different circumstances. It has different characteristics such as dominance,
aggressiveness, self-confidence etc. which can be useful to determine the consumer
behavior for particular product or service.
IV. PSYCHOLOGICAL FACTOR:
1. MOTIVATION: Motivation is the driving force within an individual generated by a

state of tension caused by unfulfilled needs and wants. Motivation is a process of
willingness to expand energy to achieve a goal or a reward. It is an urge inside a
human being to achieve something.
2. PERCEPTION: Perception is defined as the process by which an individual selects,

organizes and interprets stimuli into a meaningful and coherent picture of the world
Perception differs from individual to individual. It is the way a person sees the world
around him it is a personal phenomenon Perception is that process, which involves
seeing, receiving, selecting, organizing, interpreting and gives meaning to the things
around him it is basically a mental process, and fundamentally a cognitive on thinking
process.

3. LEARNING: Consumer learning is defined as a change in behaviour occurring on

account of part or previous experience. Learning evolves continuously and changes as
a result of newly acquired knowledge. Consumers learn from their past experience
and the future behaviour results by such learning. The learning does not resulted
deliberately. Most the learning arrives either by intentionally or by incidental. The
learning process can also be derived accidentally.
4. BELIEFS: A belief is a descriptive thought that a person holds about something.

Beliefs are centered on Knowledge, opinion or faith. This might or might not carry an
emotional change. The manufactures are very interested in them. Beliefs carried by
the customers about their products and services.
5. ATTITUDES: An attitude is a person's enduring favourable or unfavourable

evaluations, emotional feelings. and action tendencies toward some object everything,
starting from religion, politics, clothes, music etc. Attitudes results either in the liking
or disliking of a product which ends up either moving toward or away from the
product.

BUYING DECISION PROCESS
The customer buying process (also called a buying decision process) describes the journey of the
customer goes through before they buy the product.
1. NEED RECOGNITION & PROBLEM SOLVING
2. INFORMATION SEARCH
3. EVALUATION OF ALTERNATIVES
4. PURCHASE DECISION
5. POST PURCHASE EVALUATION
1. NEED RECOGNITION & PROBLEM SOLVING: This is often identified as the first
and most important step in the customer’s decision process. A purchase cannot take place
without the recognition of the need. The need may have been triggered by internal stimuli
(such as hunger or thirst) or external stimuli (such as advertising or word of mouth).
2. INFORMATION SEARCH: Having recognized a problem or need, the next step a

customer may take is the information search stage, in order to find out what they feel is
the best solution. This is the buyer’s effort to search internal and external business
environments, in order to identify and evaluate information sources related to the central
buying decision. Your customer may rely on print, visual, online media or word of mouth
for obtaining information.

3. EVALUATION OF ALTERNATIVES: Individuals will evaluate different products or

brands at this stage on the basis of alternative product attributes – those which have the
ability to deliver the benefits the customer is seeking. A factor that heavily influences this
stage is the customer’s attitude. Involvement is another factor that influences the
evaluation process. For example, if the customer’s attitude is positive and involvement is
high, then they will evaluate a number of companies or brands; but if it is low, only one
company or brand will be evaluated.
4. PURCHASE DECISION: The penultimate stage is where the purchase takes place.
Philip Kotler (2009) states that the final purchase decision may be ‘disrupted’ by two
factors: negative feedback from other customers and the level of motivation to accept the
feedback. For example, having gone through the previous three stages, a customer
chooses to buy a new telescope. However, because his very good friend, a keen
astronomer, gives him negative feedback, he will then be bound to change his preference.
Furthermore, the decision may be disrupted due to unforeseen situations such as a sudden
job loss or relocation.
5. POST PURCHASE EVALUATION: On the basis of being either satisfied or

dissatisfied, it is common for customers to distribute their positive or negative feedback
about the product. This may be through reviews on website, social media networks or
word of mouth. Companies should be very careful to create positive post-purchase
communication, in order to engage customers and make the process as efficient as
possible.

THEORIES OF CONSUMER DECISION MAKING:
Consumer behaviour theory is the study of how people make decisions when they purchase,
helping businesses and marketers capitalize on these behaviours by predicting how and when a
consumer will make a purchase.
1. ECONOMIC THEORY OF CONSUMER BEHAVIOUR
2. PSYCHOANALYTIC THEORY OF CONSUMER BEHAVIOUR
3. LEARNING THEORY OF CONSUMER BEHAVIOUR
4. SOCIOLOGICAL THEORY OF CONSUMER BEHAVIOUR
5. HOWARD SHETH THEORY OF CONSUMER BEHAVIOUR
6. NICOSIA THEORY OF CONSUMER BEHAVIOUR
WEBSTER AND WIND THEORY OF CONSUMER

BEHAVIOUR
ENGLE-KOLLAT-BLACKWELL THEORY OF CONSUMER

BEHAVIOUR
1. ECONOMIC THEORY OF CONSUMER BEHAVIOUR: In economics, the people

evaluate all the alternatives in terms of cost and value received. This product and service
gives full satisfaction. Consumers follow the principle of maximum utility based on the
law of diminishing marginal utility. Consumers will allocate his needs, tastes and
experience according to the purchasing of the consumers, also the consumer utilizes his
expenditure for different products in order to maximize utility.
The economic models well be emphasized by buying behaviour: they are

Price effect
Product
effect Income
effect
2. PSYCHOANALYTIC THEORY OF CONSUMER BEHAVIOUR:

This theory developed by Sigmund Frued. Freud’s psychoanalytic theory explains three
major concepts such as ID, ego, and superego. ID can be understood as the submarine of
an iceberg. It is the unconscious mind of a person to avoid tension and looking for
pleasure. Ego is the conscious mind that is operating the reality principle. Lastly,
superego is the moral and ethical behavior part of a human’s mind. It limits the ID’s
desires. Freud’s psychoanalytic theory and its adoption to marketing is a nonignorable
subject. Consumer’s buying behavior is strongly dependent on their unconscious mind.
3. LEARNING THEORY OF CONSUMER BEHAVIOUR: According to Kotler's

Definition, learning involves changes in an individual's behavior arising out of the
experience. Most of the human behavior is learned over time, out of the experience.
Following are the features of consumer learning:
 Consumer learning is a process. A process which continually changes and
acquires new knowledge.
 This knowledge can be obtained from reading, discussing, observing, thinking,
etc.
 Newly acquired knowledge or personal experience, both serve as feedback.
Elements of consumer learning:
 Motivation
 Cues
 Response
 Reinforcement
 Behavioral Learning
 Cognitive Learning

4. SOCIOLOGICAL THEORY OF CONSUMER BEHAVIOUR: The Sociological

Model of consumer behavior says that purchases are influenced by an individual's place
within different societal groups: family, friends, and workgroups, as well as less-defined
groups like Millennials or people who like yoga.
5. HOWARD SHETH THEORY OF CONSUMER BEHAVIOUR
The Howard Sheth model of consumer behavior posits that the buyer’s journey is a highly
rational and methodical decision-making process. In this model, customers put on a “problem-
solving” hat every step of the way — with different variables influencing the course of the
journey.
According to this model, there are three successive levels of decision-making:
Extensive Problem-Solving: In this stage, customers know nothing about the product they’re seeking or the
Limited Problem-Solving: Now
that they their

customers have more information, slow down and begin comparing choices.
Habitual Response Behavior: Customers are fully aware of all the choices they have and know which bran

6. NICOSIA THEORY OF CONSUMER BEHAVIOUR:

The Nicosia Model places emphasis on the business first and the consumer second. It argues that the c
7. WEBSTER AND WIND THEORY OF CONSUMER BEHAVIOUR
The Webster and Wind Model is a B2B buying behavior model that argues there are four
major variables that affect whether an organization makes a purchase decision. Those are:
 Environmental Variables: Environmental variables refer to any external factors that could sway a
purchase decision. Customer demands, supplier relationships, and competitive pressure are a few
examples. Broader variables apply, too, such as technology, politics, and culture.
 Organizational Variables: Organizational variables refer to internal factors that could sway a
purchase decision, such as the organization’s goals and evaluation criteria.
 Buying Center Variables: Who makes the final purchase decision? Who has the authority to sign
the contract, and who influences the buying process? Buying center variables take all of this into
account.
 Individual Variables: These variables refer to the demographic and psychographic
information of the individual prospect at the business. What’s their education and level of
experience? What are their goals and desires?
After taking all of those variables into account, B2B organizations are then able to chart a
predictable buyer’s journey for their target customers.

8. ENGLE-KOLLAT-BLACKWELL THEORY OF CONSUMER BEHAVIOUR

 Awareness: During this stage, consumers view advertisements from a business and
become aware of their need, desire, or interest, to purchase what they've just discovered.
 Information Processing: After discovering a product or service, a consumer begins to
think about how the product or service relates to their past experiences or needs and
whether it will fulfill any current needs.
 Evaluation: At this point, consumers will research the product they’ve discovered and
research options from competitors to see if there is a better option or if the original product
is the best fit.
 Purchasing Decision: A consumer will follow through with a purchase for the product that
has beat out competitors to provide value. A consumer may also stop the process if they
change their mind.
 Outcome Analysis: After making a purchase, a customer will use what they’ve bought and
assess whether their experience is positive or negative. After a trial period, they’ll keep a
product and maybe decide to become repeat customers or express dissatisfaction and return
to stage three.

MARKETING RESEARCH
DEFINITION OF RESEARCH:
According to Martin Shuttle worth, "Research includes any gathering of data, information and
facts for the advancement of knowledge".
OBJECTIVE OF RESEARCH
The purpose of research is to discover answers through the application of scientific procedures.
The main objectives of research are as follows:
a. To gain familiarity with a phenomenon or to achieve new insights into it.

b. To portray accurately the characteristics of a particular individual, situation or a
group.
c. To determine the frequency with which something occurs or with which it is
associated with something else.
d. To test a hypothesis of a causal relationship between variable.
MEANING AND DEFINITION OF MARKETING RESEARCH
Marketing research refers to the systematic gathering, recording, and analyzing of data about
problems relating to the marketing of goods and services.
According to Philip Kotler, "Marketing research is systematic problem analysis, model building
and fact-finding for the purpose of improved decision-king and control in the marketing of goods
and services".
CHARACTERISTICS OF MARKETING RESEARCH
1. Systematic and continuous activity/process

2. Wide and comprehensive domain
3. Emphasize on data collecting and critical analysis
4. Provides advantages for the company and consumers
5. A tool for management decisions
6. Decreases the gap between manufacturers and consumers

IMPORTANCE OF MARKETING RESEARCH
1. Identifies new products or services

2. Identifies potential customers
3. Establishes viability of a product or service

4. Anticipates and discovers future market trends
5. Keeps your company ahead of competitors
6. Decides best marketing strategy
7. Reduces risk and increases profitability
8. Identifies threats and opportunities
STEPS IN MARKETING RESEARCH PROCESS
1. IDENTIFYING & DEFINING A MARKETING PROBLEM

2. CONDUCTING A PRELIMINARY EXPLORATION
3. DETERMING RESEARCH OBJECTIVES
4. DETERMINING THE DATA REQUIRED AND THEIR SOURCES

5. CREATING RESEARCH DESIGN
6. DESIGNING THE QUESTIONNAIRE
7. DESIGNING A SAMPLE OF RESPONDENTS

8. COLLECTING DATA
9. ORGANIZING/PROCESSING THE DATA COLLECTED
10. ANALYZING & INTERPRETING DATA

11. PREPARING RESEARCH REPORT
12. PRESENTING RESEARCH REPORT

13. FOLLOW UP STEPS

ROLE OF MARKET IN THE DECISION-MAKING SYSTEM
Market and economic analysis

Marketing research for new product
Customer satisfaction research
Viral marketing research
MARKETING RESEARCH
ADVANTAGES & DISADVANTAGES
ADVANTAGES DISADVANTAGES
 Indicates current market trends Offers suggestions and not decisions
 Pinpoints deficiencies in
marketing policies Fails to predict accurately
 Explains customer resistance
Cannot study all marketing problems
 Suggests sales promotion
techniques Resistance to research by marketing
 Guidance to marketing executives
executives
 Selection and training of sales Time-consuming activity
force
Uncertainty of conclusions:
 Facilitates business expansion
 Provides marketing information Limitations of data used:

MARKET SEGMENTATION
Segmentation is the process of defining and subdividing a large homogenous market into clearly
identifiable segments having similar needs, wants, or demand characteristics.
DEFINITION
"Market segmentation consists of taking the total heterogeneous market for a product and
dividing it into several sub-markets or segments, each of which tends to be homogenous in full
significant aspects".
-William J. Stanton
OBJECTIVES OF MARKET SEGMENTATION
 The objective of market segmentation is to minimize risk by determining which products

have the best chances of gaining a share of a target market and determining the best way
to deliver the products to the market.
 Market segmentation allows a company to increase its overall efficiency by
focusing limited resources on efforts that produce the best return on investment
(ROI).
BASES OF MARKET SEGMENTATION

PEOPLE ORIENTED APPROACH / CUSTOMER PERSONAL APPROACH
The knowledge of personal characteristics of consumers points out who are our buyers, where
do they live and how they think.
1. Geographic Segmentation:
Geographic location is one of the simplest methods of segmenting the market. People living in
one region of the country have purchasing and consuming habit which differs from those living
in other regions. For example, life style products sell very well in metro cities, e.g., Mumbai,
Delhi, Kolkata and Chennai but do not sell in small towns. Banking needs of people in rural
areas differ from those of urban areas. Even within a city, a bank branch located in the northern
part of the city may attract more clients than a branch located in eastern part of the city.
2. Demographic Segmentation:
Demographic variables such as age, occupation, education, sex and income are commonly used
for segmenting markets.
(a) Age: Teenagers, adults, retired. (b) Sex: Male and female.
(c) Occupation: Agriculture, industry, trade, students, service sector, house-holds, institutions.
 Industrial sector: Large, small, tiny.
 Trade: Wholesale, retail, exporters.
 Services: Professionals and non-professionals.
 Institutions: Educational, religions, clubs.
 Agriculture and cottage industries.
(d) Income Level: Above Rs. 1 lakh per annum, Rs. 50,000 to Rs. 1 lakh, Rs. 25,000 to Rs.
50,000 per annum, i.e., higher, middle and lower.
(e) Family Life-cycle: Young single, young married no children, young married youngest child
under six, young married youngest child over six, older married with children, older married no
children under eighteen, older single, etc.

3. Psychographic Segmentation:
Under this method consumers are classified into market segments on the basis of their
psychological make-up, i.e., personality, attitude and lifestyle. According to attitude towards life,
people may be classified as traditionalists, achievers, etc. Personality is the individual's
consistent reactions to the world about him. Personality tests attempt to measure such
characteristics as dominance, aggressiveness, objectivity, achievement, motivation, etc., which
may influence buyer behaviour.
Life Styles: Life style concept is also considered as another important variable determining buyer
behaviour. Life style reflects the overall manner in which persons live and spend time and
money. It is behavioural concept enabling us to grasp and predict buyer behaviour. Life style
concept has interdisciplinary approach as it involves sociology, culture, psychology and
demography. Life style concept as a basis for segmentation is quite reasonable and desirable.
Life style can be measured by the products the person consumes and by the person's activities,
interests, opinions, and values (AIOs).
PRODUCT ORIENTED APPROACH / CUSTOMER RESPONSE CHARACTERISTICS
Why consumers buy a product and their response or behaviour towards a product or a store
selling the products or brands.
1. Use Pattern: The use of the total consumption of a family unit for a given product may act as
a basis of segmentation. A buyer may be classified as heavy, medium, lightified, the non-users.
Marketer is usually interested in heavy users. If heavy users can be identified, the marketing
effort can be concentrated on this segment of the market. Usage information can be combined
with other characteristics of heavy users such as age, income level, family life-cycle stage.

2. Benefits Pattern: Benefits segmentation gives emphasis on wants and desires of consumers.
Benefits sought by consumers are the basic reason for the very existence of the market segment.
It is obvious that people buy a product primarily to secure expected benefits. Customer
satisfaction directly depends upon product benefits, e.g., economy, performance, style,
durability, status, product appearance, taste, flavour, etc. First consumers are grouped on the
basis of benefits they expect and then each segment may be analysed on the basis of
demographic, socio-economic characteristics to secure better understanding of each segment.
3. Brand/Store Loyalty: Customer loyalty may be used as a basis for market segmentation.
Loyalty segmentation enables marketer to tailor the promotional content and product appeal to
retain the loyal customers, to attract new customers from rival brands or to convert non-loyal into
loyal buyers. However, brand/store loyalty is not easy to measure.
REQUISITS / ESSENTIAL OF A SOUND MARKET SEGMENTATION
1. Precise Satisfaction of customer needs: - In a common market needs expectation of

customers differ and it is important for marketing firm to have a Comprehensive Understanding
of customers’ requirements therefore by developing a distinct marketing mix for each segment of
customers a marketers can offer better solutions for customer needs.
2. Increased Profits: - By following an effective Segmentation strategy a marketing firm can

respond more effectively to the wants of potential buyers by meeting their needs through better
positioning of chosen Segments, this also allows marketing for to gain the best price it can in
every segment, effectively raising the average price resulting in increased sales volume and
higher profits.
3. Effective allocation of resources. proper marker segmentation results in Effective allocations

of resources, with help of target marketing communication in the form of promotions and
advertisement customers will be able to identify the product and brand quickly as they are
focused in meeting specific needs of customers. They using a mix of quantitative and qualitative

approaches to categorise customers with specific characteristics a marketer utilizes to best

possible extend.
4. Retain customers: Meeting customer needs by delivering products or services according to

their requirements through segmentation facilitates a marketing firm to retain that customer’s
loyalty as their need change. Therefore, marketers has to deliver products that it reaches to
customers at different stages of their life, if the marketers meets all their requirements of
customers at different phases then retaining customers becomes easy otherwise they switch to
competiting product & brands.
5. Focused marketing communications: - Market Segmentation permits marketing firms to

ascertain media channels that can particularly reach the target group and also delivers marketing
message to a relevant audience. Following a broader target market, a mass market results in risk
of missing key customers and this will also increase the communication cost leading to low
profits. Thus, by segmenting markets the target customers can be reached more often and at
lower cost.
TARGET MARKETING
Meaning:
A target market is a group of people that have been identified as the most likely potential
customers for a product because of their shared characteristics such as age, income, and lifestyle.
Definition:
According to Philip Kotler, “Target market as a set of individuals sharing common needs or
characteristics that the company decides to serve; these individuals are usually the end users of a
product”.

BASIC STRATEGIES FOR TARGET MARKET SELECTION ARE AS FOLLOWS OR

LEVELS OF SEGMENTATION.
1. SELECTIVE MARKETING (DIFFERENTIATED MARKETING)

Differentiated Marketing strategy is also known as the segmented marketing strategy. It
decides to select several target markets in the industry and produce customized products for
each market segment. By offering separate product types for each market segment, the
organization is expecting to achieve a higher market share in each market segment and plan
to stabilize separately in each segment.
EX: HUL uses selective targeting to offer customers many different products in the family
care, home care & personal care.
2. MASS MARKET (UN DIFFERENTIATED MARKETING)

This is also known as the Mass marketing strategy. Under this strategy, the organization
decides to ignore the market segmentation and decide to produce it to the entire market. This
is suitable for productions such as garment and necessary food. This type of strategy focuses
on the common needs of the consumers and products to satisfy those common needs. There is
no uniqueness or specification for the product.
3. SINGLE SEGMENT TARGETING (CONCENTRATED MARKET/NICHE

MARKETING)
Concentrated marketing is known as Niche marketing as well. Under the concentrated

marketing strategy, the organization focuses on a large share of one or more small segments
(niches). Through concentrated marketing, the organization is planning to achieve a strong
market share and create brand loyalty in the customers. By focusing on one or a few niches
the organization is planning to obtain better knowledge on the customer needs and provide
exactly what they are expecting from the product. This strategy helps smaller companies to
focus on their resources and provide with minimum waste and achieve bigger and better
market share.

4. MICRO MARKETING Micromarketing strategy is about producing the product and the
marketing method to suit the taste of a specific individual or specific location. Rather
than producing for every customer, micromarketing concentrates on satisfying the needs of
specific, prestigious customers.
Micromarketing can be divided into two categories naming local marketing and individual
marketing.
1. Local Marketing – This is about providing a product or a service based on

the requirement of a customer group
2. Individual Marketing – This is about providing a product or a service based on an
individual customer. This can be identified as one-to-one marketing or mass
customization.
HOW TO CREATE A TARGET MARKET STRATEGY
 Identify your current consumer base.

 Evaluate target markets for viability.
 Determine the best marketing strategy.
 Create a client profile.
 Analyze your data.
MEANING OF DIFFERENTIATION
A differentiation strategy is an approach business develop by providing customers with

something unique, different and distinct from items their competitors may offer in the
marketplace. The main objective of implementing a differentiation strategy is to increase
competitive advantage.

TYPES OF DIFFERENTIATED STRATEGY
What is a broad differentiation strategy?
A broad differentiation strategy consists of building a brand or business that is different in

some way from its competition. It is applied to the industry and will appeal to a vast range of
consumers.
What is a focused differentiation strategy?
A focused differentiation strategy requires the business to offer unique features to a product
or service, and it must fulfil the requirements of a niche or narrow market.
POSITIONING:
positioning in marketing is a strategic process that involves creating an identity/ image of the
brand or product within the target customers’ minds.
DEFINITION:
According to Philip Kotler “positioning is the act of designing the company’s image and value
offer so that the segments customers understand and appreciate what the company stands for in
relation to its competitors”.
TYPES OF POSITIONING IN MARKETING.

5 Examples of Positioning in Marketing
Price
Quality  Tesla
Service  Star bucks
Distribution  Apple
Packaging  Nike

UNIT 3: PRODUCT AND PRICING STRATEGY

INTRODUCTION
A product means an object which satisfies the need of the customer. A product is an entity/article
obtained by the transformation of raw material with the aid of man/machine power and is a
marketed/sold by the producer.
DEFINITION
According to Philip Kolter, "A product is anything that can be offered to a market to satisfy a
want or need. Products that are marketed include physical goods, services, experiences, events
persons, places, properties, organizations, information’s and ideas".
BRAND: Brand is name, term, symbol, mark or design or a combination of them which is
intended to identity goods or services of one seller or a group of sellers and to differentiate them
from those of competitors.
PRODUCT LEVELS
A particular product has 5 levers (core benefit generic product, expected level, augmented
product and potential product). When a buyer buys a product, he buys a package, not only the
tangible product.
 Core Benefit: The core benefit is the fundamental need or wants that the customer
satisfies when they buy the product. For example, the core benefit of a hotel is to provide
somewhere to rest or sleep when away from home.
 Generic Product: The generic product is a basic version of the product made up of only
those features necessary for its function. In our hotel example, this could mean a bed,
towels, a bathroom, a mirror, and a wardrobe.
 Expected Product: The expected product is the set of features that the customers expect
when they buy the product. In our hotel example, this would include clean sheets, some
clean towels, Wi-fi, and a clean bathroom.
 Augmented Product: The augmented product refers to any product variations, extra
features, or services that help differentiate the product from its competitors. In our hotel

example, this could be the inclusion of a concierge service or a free map of the town in
every room.
 Potential Product: The potential product includes all augmentations and transformations
the product might undergo in the future. In simple language, this means that to continue
to surprise and delight customers the product must be augmented. For example, it could
be some chocolates on one occasion, and some luxury water on another. By continuing to
augment its product in this way the hotel will continue to delight and surprise the
customer.
PRODUCT CONCEPT
The term product concept was used by Theodore Levitt. According to him, “product concept
refers to the augmented product or the aggregate of satisfactions that a user obtains”.
For example, if a firm sells an offset printing machine to a customer, it may augment the product
in several ways.
It may (1) provide long term credit facility; (ii) assure a timely supply of spare parts (iii) give a
guarantee for a number of years, (iv)periodical servicing, and (v) machine. Here the buyer does
not merely buy the offset printing machine but also buys the augmented product – the product
augmented by financial warranty, service, credit etc. Thus product concept refers to total
product. It provides a reason for buying the product.
CLASSIFICATION OF PRODUCTS OR GOODS
Products can be classified into three groups according to their durability or tangibility.
1. Non-durable goods: These goods are consumed fast and purchased frequently. Examples
include soap, salt etc.
2. Durable goods: These goods can be used for a long time. In other words, they can be used
again and again. Hence they are not purchased frequently. Examples include refrigerator,
machine tools, clothing, furniture etc. The purchases of durable goods can be postponed.
3. Service: These are activities, benefits or satisfaction offered for sale. Examples include
haircut, repairs, train journey etc. Service are intangible, inseparable, variable and
perishable.

On the basis of consumption, goods can be clarified into two-consumer goods and industrial
goods.
1. Consumer goods: Consumer goods are those which are purchased for final consumption.
These goods are purchased by ultimate consumers to satisfy their wants directly.
Examples include rice, potato, milk, pulses, detergents, tooth paste, blade, shoe, pen,
paper, two wheelers, furniture, TV, car, books, audio system etc.
Characteristics of Consumer Goods Consumer goods have the following essential
features:
Final Consumption
Finished products
Utility
Associated services
Brand name
2. Industrial goods: These goods are meant for use in the production of other goods or for
some business or institutional purposes. These goods are not directly used by consumers.
Industrial goods are classified into four-production facilities and equipment’s, production
materials, production supplies and management materials
DIFFERENCE BETWEEN CONSUMER GOODS AND INDUSTRIAL GOODS
CONSUMER GOODS INDUSTRIAL GOODS
Consumers good are used by final consumers Industrial goods are used by producers
Demand for consumer goods is director or Demand for industrial goods is derived from
primary demand consumer goods
Consumer goods are available for final Industrial goods are available for further
consumption production
Volume of purchase of consumer goods is low Volume of purchase of industrial goods is high
Channel of distribution of consumer goods is long Channel of distribution of industrial goods is short

PRODUCT DEVELOPMENT
Product development simply means the introduction of new products in the existing market. It
includes the technical activities of product research, engineering and design.
NEW PRODUCT DEVELOPMENT
A firm develops new products as a means of enhancing its product mix. Introducing a new
product is very difficult because it involves long range planning.
According to Frederick Webster, product development includes a number of decisions, namely,

what to manufacture or buy, how to have its packaging, how to fix its price and how to sell.
STAGES IN NEW PRODUCT DEVELOPMENT
1. Generating Product Ideas
2. Screening of Ideas
3. Concept Development & Testing
4. Business Analysis
5. Product Development
6. Market Testing
7. Commercialisation (Product launch):
1. Generating Product Ideas: Ideas may generate from various sources. All the sources of
product ideas may be classified into two. – Internal sources and External sources. Internal
sources are R & D department, company’s sales persons, employees, top management
etc. External sources are customers, competitors, distributors, advertisement agencies,
trade associations, external research firm, university laboratory etc.

2. Screening of Ideas: After generating the product ideas the next step is screening of these
ideas. Many of the ideas generated for new products will not be suitable for a company.
Therefore, the ideas collected are scrutinized and evaluated to eliminate unsuitable ideas.
Only profitable and promising ideas are selected for further investigation. Screening ideas
is the process of evaluating product ideas to judge whether they match company’s
objectives and policies.
3. Concept Development & Testing: The product idea should be converted into product
concept. There is a distinction between product idea and product concept. Product idea is
an idea for possible product that can be offered to the market. A concept is a detailed
overview of the idea. It is a meaningful expression of the product in the light of
consumers need. Suppose, a company had the idea of new type of snack bar that was high
in vitamin C, then this idea (snack bar) might have several concepts as follows.
4. Business Analysis: At this stage the finally selected ideas is analysed to determine the
desirable market features of the product and its feasibility. The product ideas are
evaluated to determine its potential contribution to the firm’s sales, cost and profits.
Market or business analysis involves projection of future demand, financial requirement,
cost estimates and profit. Anyway the starting point for any business analysis is a
estimate of the total market potential. Marketing research is critical during this phase.
5. Product Development: The first four steps may be treated as ‘preparation’. Now is the
time to go into ‘Action’, but on a sampling basis. The product concept is now taken up by
the research and development department for giving it a physical form. The process of
development of a product includes for stages: (i) developing model (ii) testing of
consumer’s preference, (iii) taking decisions about brand including registration of patent,
trademark etc., and (iv) deciding the packaging.
6. Market Testing: After the product has been developed, the marketer will have test the
reactions of dealers and customers in handling and using the product and the size of the
market.
7. Commercialisation (Product launch): Commercialisation of product means large scale
production and distribution of a product. In this stage the product is submitted to the
market. Marketing programmes begin to operate; now the product starts its life cycle.
This stage is considered to be crucial one and requires a careful consideration.

PRODUCT LINE:
Product Line refers to the collection of related products marketed under a single brand, which
may be the flagship brand for the concerned company. Typically, companies extend their product
offerings by adding new variants to the existing products with the expectation that the existing
consumers will buy products from the brands they are already purchasing.
Example: Amul offers a plethora of product lines that are closely related but still different. Its
products include milk, flavored milk, chocolate, butter, curd, yogurt, ghee, etc.
PRODUCT LIFE CYCLE
Product’s life begins with its market introduction, then goes through a period during which its
market grows rapidly, eventually it reaches at maturity and then stands saturated. Afterwards, its
market declines and finally its life come to an end. Thus, a product passes through different
stages. The stages through which a product passes are collectively known as product life cycle.
A product life cycle is divided into four stages – introduction (a need is planted), Growth (root
takes place and leaves come out), Maturity (adulthood takes place), and Decline (plant begins to
shrink and finally die). The various stages of product life cycle are discussed as follows.

1. Introduction: This is the first stage in the life of a product. After testing, a product enters
the introduction stage and the product will then become available in the market. During
this stage the sale are low.
Pricing strategy (skimming strategy): This is the strategy of fixing a high price with
high promotion expenses. This is done to earn more profits, develop the brand image and
convince the buyers about the superior features of the product through high promotional
efforts.
2. Growth: During the growth stage, more customers begin to buy the product. This is
because customers who purchased during the introduction stage are purchasing again or
have recommended the product to colleagues, friends and family. Sales will begin to
grow and the company, which has been incurring losses, begins to make profit. At this
stage, competitors may enter the market. Sales reach their optimum level but the sales
growth slows down. Cell phones and internet shopping sites are currently experiencing
rapid growth.
3. Maturity: This stage has the longest duration. In the maturity stage, the demand for the
product reaches a saturation point. Competition becomes severe. During this stage the
manufacturers introduce new model or adopt methods such as trading in etc. to promote
sales.
4. Decline: At this stage, sales began to fall. There may be a little or no profit. The
production cost and inventory cost become larger. At this stage the competition becomes
severe. Customers go for newer and better products due to technological development,
change in taste etc. Therefore, sales start declining. This stage will lead to gradual
phasing out of the product. Carbon paper, B & W Television sets, telegrams, typewriters,
fountain pen etc. Are products that have entered decline stage (now telegram is no more).
Demand for Kodak’s film products is falling rapidly because the popularity of digital
photography is rising.
INTRODUCTION: sales are starting

GROWTH: Rising sales at increasing rate
MATURITY: rising sales at decreasing rate
SATURATION: stable sales
DECLINE: falling sales.

PRICE
Price as the money value of a product or service agreed upon in a market transaction. Price is the
only marketing mix element that produces revenue.
Price is the amount paid by the buyer to the seller for a product. It is the exchange value of a
product or service in terms of money.
PRICING
Pricing is a process of fixing the value that a manufacturer will receive in the exchange of
services and goods.
OBJECTIVE OF PRICING
 To maximize profit
 To maintain or improve the market share
 To achieve a desired rate of return on investment
 To meet or prevent competition
 To stabilize the product prices
FACTORS INFLUENCING PRICING DECISIONS OR PRICING POLICIES
Internal Factors
External Factors
Internal factors are those factors which lie

External factors are those factors which are beyond
within the control of the organization.
the control of an organization. The following
These factors are controllable. The various
external factors would influence the pricing
internal factors are explained below:
decisions
Costs
Demand
Objectives
Competition
Organizational factors
Distribution channels
Marketing mix
General economic conditions
Product differentiation
Govt. policy
Product life cycle

PRICING POLICIES
According to Cundiff and Still, “Price policies provide the guidelines within which pricing
strategy is formulated and implemented”.
PRICING METHOD
Pricing method is a technique that a company apply to evaluate the cost of their products.
TYPES OF PRICING METHOD:
The pricing method is divided into two parts:
1. Cost Oriented Pricing Method– It is the base for evaluating the price of the finished
goods, and most of the company apply this method to calculate the cost of the product.
This method is divided further into the following ways.
o Cost-Plus Pricing- In this pricing, the manufacturer calculates the cost of

production sustained and includes a fixed percentage (also known as mark up) to
obtain the selling price. The mark up of profit is evaluated on the total cost (fixed
and variable cost).
o Markup Pricing- Here, the fixed number or a percentage of the total cost of a
product is added to the product’s end price to get the selling price of a product.
o Target-Returning Pricing- The company or a firm fix the cost of the product to
achieve the Rate of Return on Investment.
2. Market-Oriented Pricing Method- Under this category, the is determined on the base
of market research
o Perceived-Value Pricing- In this method, the producer establish the cost taking
into consideration the customer’s approach towards the goods and services,
including other elements such as product quality, advertisement, promotion,
distribution, etc. that impacts the customer’s point of view.

o Value pricing- Here, the company produces a product that is high in quality but
low in price.
o Going-Rate Pricing- In this method, the company reviews the competitor’s rate
as a foundation in deciding the rate of their product. Usually, the cost of the
product will be more or less the same as the competitors.
o Auction Type Pricing- With more usage of internet, this contemporary pricing
method is blooming day by day. Many online platforms like OLX, Quickr, eBay,
etc. use online sites to buy and sell the product to the customer.
o Differential Pricing- This method is applied when the pricing has to be different
for different groups or customers. Here, the pricing might differ according to the
region, area, product, time etc.
Methods or Strategies of Pricing of New Products
1. Price Skimming: Price skimming involves setting rates high during the introductory
phase. This is designed to help businesses maximize sales on new products and services.
Once the products or services are introduced, company lowers the prices gradually. This
is done eventually as competitor goods appear on the market.
2. Pricing For Market Penetration: Penetration strategies aim to attract buyers by offering
lower prices on goods and services. Many new companies use this technique to draw
attention away from their competition. But penetration pricing does lead to an initial loss
of income for the business.
3. Product Line Pricing: You have to set different prices for various offerings in a product
line in case your business offers different product lines. This price differentiation takes
into account cost differences between the products in a given product line.
Furthermore, it also considers customer perceptions with regards to the value offered
by different products in a given line.


Principles of Marketing 1 To 3

Uploaded by

Copyright:

Available Formats

Principles of Marketing 1 To 3

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Principles of Marketing 1 To 3

Uploaded by

Copyright:

Available Formats

PRINCIPLES OF MARKETING NEP SYLLABUS BCOM 1ST SEM

MODULE 1: INTRODUCTION TO MARKETING

The first concept to be understood in marketing management is MARKET.

"A market is an area for potential exchanges."- PHILIP KOTLER

 Buyers and Sellers are the two sides of the market.

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 1

NATURE AND IMPORTANCE OF MARKETING

1. Marketing is consumer – oriented process

1. Study of consumer needs & wants

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 2

4. Standardisation and Grading: Standardisation refers to the process of ensuring uniformity in

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 3

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 4

MEANING OF MARKETING MIX

ELEMENTS OF MARKETING MIX

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 5

1. Product in Marketing Mix:

2. Price in Marketing Mix:

3. Place in Marketing Mix:

4. Promotion in Marketing Mix:

5. People in Marketing Mix:

6. Process in Marketing Mix:

7. Physical Evidence in Marketing Mix:

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 6

Managerial or Decision-making approach

Some Other approaches are as follows:

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 7

various marketing functions -buying, selling, pricing, standardization, storage,

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 8

DEFINITION & MEANING OF MARKETING MANAGEMENT

According to Philip Kotler, "marketing management is the analysis, planning.

CORE CONCEPTS THAT DRIVE MARKETS (MARKET – CYCLE)

Core Concepts of Marketing

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 9

GOALS OF MARKETING SYSTEM

A. GOALS BASED ON ECONOMIC ACTIVITY

B. GOALS FOR LONG TERM RELATIONSHIP

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 10

THE ROLE OF MARKETING IN ECONOMIC DEVELOPMENT

 Specialization in activities of comparative advantage

TRADITIONAL CONCEPT MODERN CONCEPT

 Product oriented marketing  Customer oriented marketing

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 11

DIFFERENCE BETWEEN SELLING AND MARKETING

BASIS SELLING MARKETING

Related to Constraining customer’s perception of Leading commodities and services

Beginning point Factory Marketplace

Concentrates on Product Consumer needs

Perspective Inside out Outside in

Business Planning Short term Long term

Orientation Volume Profit

Cost Price Cost of Production Market ascertained

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 12

COMPONENTS OF MARKETING ENVIRONMENT

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 13

ENVIRONMENT SPECIFIC TO THE FIRM

1. GLOBAL ENVIRONMENT: The global business environment is a term used to

DEPARTMENT OF COMMERCE, SFS COLLEGE HEBBAGODI, BANGALORE UNIVERSITY Page 14

VALUE PHILOSOPHY IN MARKETING